Ballmer, Chambers and Charlie Rose
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The CEOs of Cisco and Microsoft sat down for a so-called "conversation" this morning in New York with a prominent PBS journalist. The meeting was a prelude to increased competitive warfare between the companies. |
Microsoft chief Steve Ballmer and Cisco chief John Chambers agreed to be interviewed by Charlie Rose. The two high tech luminaries flanked Rose, who sat center stage at the Mandarin Oriental in New York.
The pair-up comes at a time of increased competition between Cisco and Microsoft, which, as I explained on July 30, is potentially bad for the channel. Cisco and Microsoft are two of the most partner-friendly companies on the planet. But there is tremendous channel overlap, too. Conflict is inevitable.
Today's joint CEO conference clearly was meant to allay concerns on numerous fronts, whether it be customers, partners or shareholders. Make no mistake: These companies are on a collision course in the enterprise, and no amount of Ballmer-Chambers huggy, kissy talk is going to change that.
"The enterprise is clearly an area that they both want," said Roger Kay, president of Endpoint Technologies.
Historically, superpowers negotiate truces before one or more goes to war. Germany alliances at the start of World War II are good examples. But these kinds of alliances are more strategic than agreements to war together. Business is warfare, and Microsoft has declared enterprise communications as its territory.
"In some areas, like unified communications, there can be only one winner," Kay said.
Cisco-Microsoft Song and Dance Show
Chambers described the Cisco-Microsoft relationship as "partnering and competing."
"John initiated this round of the discussion," Ballmer said in response to a Rose question. That says to me Cisco is very concerned about increased Microsoft competition. Similarly, Microsoft has got to be concerned about pushing into territory occupied by Cisco.
Rose asked about "stories in the press ... of getting on each other's turf." Chambers gave a big non-answer, talking about communicating with the press and transformations in the industry. Rose asked some pretty good questions. He just didn't get lots of good answers.
Ballmer and Chambers asserted that this morning's conversation came about because of customer concerns, which Ballmer conceded could have started because of stories in the press.
"Our customers like the fact that we compete," Ballmer said. Really? Then why do Cisco and Microsoft feel the need to have this big, public discussion that is supposed to calm customers about increasing competition?
"You tolerate each other because of your customers," Chambers said.
Kay said that the Ballmer and Chamber responses "appeared to pledge to remain interoperable, and you can be sure that message is what their customers want to hear."
Rose asserted that the "center of gravity of computing is shifting to the Internet." Chambers quickly agreed. Ballmer did not. The two different responses say much about the two companies' areas of focus. Cisco's heritage is the Internet, and networking is the company's future. Microsoft is all about the desktop. The shift of computing and informational relevance to the Internet is great for Cisco, but not so good for Microsoft.
To Cisco, the center of the network is the so-called "cloud"—the Internet. For Microsoft, the desktop and enterprise server together form the network center.
"Market transitions wait for no one," Chambers said. He's certainly right about that.
"The next wave of innovation will be about collaboration," he said, emphasizing that Web 2.0 would enable collaboration.
Allies, Foes and Frenemies
Ballmer bristled at a Rose question about Google competition. Microsoft's CEO made clear that Google is a competitor, but that the point of the morning's discussion was Cisco and Microsoft.
By contrast, Chambers said that, "Google is neither a friend nor foe." In fact, he said he likes anyone that "loads networks," as does Google with video. The two different responses again show how much the Internet and networking remain Cisco opportunities but present competitive problems for Microsoft.
Web 2.0 companies are generally Cisco allies, while the larger Web platform competes with Microsoft software. Microsoft's focus is software plus services, while Cisco partners like Google focus on services plus software.
Chambers said "Web 2.0 will transform business." Interestingly, he cited this transformation as major reason why Cisco must cooperate with Microsoft.
"Do you believe Cisco and Microsoft have the same culture?" Rose asked. "No," Chambers firmly responded. Ballmer gave no answer. The differences in corporate culture say much about the companies' different points of center: The Internet/networking and the desktop/enterprise server.
Both CEOs described 10 areas of key market focus but said little about where there would be clear cooperation—even during a Cisco-Microsoft demonstration of interoperable/cooperative products.
Chambers described the areas of potential cooperation as video, data, voice over the network. But those same areas are points of competition.
"We're going head to head," Ballmer said about Cisco-Microsoft cooperation. He emphasized the importance of "IP networks" replacing "legacy" voice systems.
"I think that's right," Ballmer said to Rose, when he asked if unified communications would be the "principal area of competition."
For Microsoft, change is inevitable and potentially problematic. "It'll be noticeably less," Ballmer said in response to a Rose question about Office and Windows percentage of revenue in 2012. Microsoft needs to shift revenue elsewhere, but also expand into new areas, such as unified communications, that could pull desktop software sales.
Two things: Little from the joint demonstration or the CEOs' responses offered real assurances that the companies would seriously cooperate in the areas of IP networks or unified communications. Again, I see more posturing going on here while the companies prepare for increased competition.
Ballmer said that he had respect for Cisco. However, "anything that they do that we do, I have more respect for us."
That's more a statement of competition than cooperation. War for enterprise territory is inevitable.
Comments (44)
Joe, the one thing that you failed to mention is that both CEOs agreed that 80 to 90 percent of their business did not overlap and was not competitive. So, while it is more interesting to declare "war," to get their own read I would encourage your readers to go http://newsroom.cisco.com where they can watch the replay of the webcast, read a q&a between the ceos, as well as see the areas that the companies agreed to cooperate and compete.
Posted by John Earnhardt | August 20, 2007 12:34 PM
From Joe's article; Quoting Steve Ballmer; ""It will be noticeably less," Ballmer said in response to a Rose question about Office and Windows revenue in 2012."
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So why would it be less, and for that matter "noticeably less?" After all, in 2010 Windows Seven is due out, they could even hit the release date of 2009 on Seven as originally plained, and then release a new Windows version Eight (catchy name) in 2012, if they wanted to.
My guess is Ballmer is seeing the handwriting on the wall with Vista. Buyer resistance to Vista is strong, the Mac is resurgent, and Linux, BSD, and OpenSolaris, will also take some market share. MS might even have to reduce its prices, or be faced with more class action suites, or government pressure from the EU or other countries.
Posted by chips | August 20, 2007 12:34 PM
Interesting links:
Jim Louderback wrote, "If Microsoft can't get Vista working, I might just do the unthinkable: I might move to Linux."
www.pcmag.com/article2/0,1895,2171472,00.asp
Steven J. Vaughan Nichols:Louderback, it's not unthinkable. To make it as easy as possible, I recommend you check out Lenovo's new line of SLED-powered ThinkPads.
www.desktoplinux.com/news/NS3000193202.html
Posted by Marco | August 20, 2007 3:18 PM
Somebody is in trouble by Microsoft's move into the Unified communication area that is not Microsoft. Microsoft's new products in this area are revolutionary enough and goes into Cisco's core business. Cisco should be very worry about this and I can't blame them.
Posted by evan | August 20, 2007 4:05 PM
"Rose asked Ballmer about growth of the Windows operating system and office over the next five years. He responded that dollar growth for Vista and Office will continue, but there will be faster growth in advertising, servers, mobile phones, Xbox and other areas.
This is what I read in Zdnet.http://blogs.zdnet.com/BTL/?p=5990
That seem's contradictory to the statement reported here...Either Balmer contradicts himself or one of the 2 reporters made a mistake.
Posted by evan | August 20, 2007 4:45 PM
I find it very funny, all the people who know something about PCs, knows of Louderback and of his predilection for MS's products. Now he says: "So why, nine months after launch, am I so frustrated? The litany of what doesn't work and what still frustrates me stretches on endlessly".
What can I say? this is really a punch to Ms' stomach. And a big warning to those who don't know much about Vista, to keep away from it.
How times change...don't they?
Posted by Marco | August 20, 2007 5:15 PM
Ed Bott:
"Vista-bashing is the ticket to online success. I’ve said it before, but it bears repeating: I could literally double my income if I went into the Vista-bashing business. Want to guess how many times Jim Louderback’s writing was featured on Slashdot in the last four years? Only once, until he pushed the “Vista sucks” button."
"Whiners don’t link, either, except to their own stuff. If you’re having audio-related problems with Windows Vista and you try to find answers, who’s going to be more helpful: the elite columnist trolling for page views by mixing up a big batch of snarky, whiny bloggage about how much Vista sucks? Or the blogger or newsgroup contributor who provides the one tiny technical detail you needed to fix an annoyance?"
Posted by reflections | August 20, 2007 7:21 PM
"For Microsoft, change is inevitable and potentially problematic. "It will be noticeably less," Ballmer said in response to a Rose question about Office and Windows revenue in 2012."
He specifically asked Rose if he meant as a % of the total, Joe. Did you not listen, or did you just decide that saying "less", without providing the full context, is more consistent with your agenda?
Posted by Paul | August 20, 2007 7:55 PM
Congratulations Joe yet another story blown out of all proportions pandering to the "anti vista" lobby that infests this site.
For an "equal" look at this subject go to http://newsroom.cisco.com and see what they have to say.
Or as Evan said "That seem's contradictory to the statement reported here"
Or Ed Bott "Vista-bashing is the ticket to online success. I’ve said it before, but it bears repeating: I could literally double my income if I went into the Vista-bashing business. Want to guess how many times Jim Louderback’s writing was featured on Slashdot in the last four years? Only once, until he pushed the “Vista sucks” button"
And that is purely what goes on in this site "Microsoft Watch" NO>> try "Microsoft Bash" !!
Posted by Neil | August 20, 2007 8:12 PM
Evan wrote: "Either Balmer contradicts himself or one of the 2 reporters made a mistake."
You be the judge, Evan. From Microsoft's official transcript:
"CHARLIE ROSE: As your companies -- and I'll close with this and we'll get Charlie and Bob out here -- as you look at the future, five years from now, the percentage of your business that comes from Windows Vista and Office will be -- how will it be different between 2007 and 2012, five years from now? Will it be dramatically less?
STEVE BALLMER: Percent?
CHARLIE ROSE: Yes.
STEVE BALLMER: It'll be -- it'll be noticeably less. Yeah, I mean, look, I've already said to our shareholders the bulk of our actual dollar growth over the next few years will come out of -- at least a large percentage -- will come out of Windows and Office, of our dollar growth.
CHARLIE ROSE: Right, dollar growth.
STEVE BALLMER: But we have businesses that will grow much faster than Windows and Office, so it will be, correspondingly, a lower percentage of our total. We have to have huge growth in advertising. We have to have huge growth in servers and enterprise computing, huge growth in mobile phones, huge growth in a variety of areas -- in Xbox, in Xbox attach and everything that we're doing there."
Joe
Posted by Joe | August 20, 2007 8:23 PM
Ha,ha,ha
Desperation in the atmosphere?
What a difficult thing for a "MS' fan"(I am saying it delicately.) they say: "lets go to shut up Joe, and anyone who does not bow to Ms" but they do not understand that the fire is now uncontrollable.
"Wow, you can smell the desperation coming from they"
Feel the ‘Wow'
Posted by Marco | August 20, 2007 8:32 PM
So Marco,
We finally get in straight from the horse's (or I mean the monkeys) mouth himself, #2 at Micro$oft. Windows and Office will be "noticeably less" in a few years time. Good thing that the Micro$ofties can count on Zune, and Xbox360 profits. Also, that they are going bury Google, LOL.
But even I would not completely shut the door on that piece of viral DRM code that is called M$ Vi$ta just yet. Service Pack 1 will come out and fix some of the problems, but will it fix all the 3rd party software programs out there that don't work with it? Thats the one that will make Vista, or make it "noticeably less."
Posted by chips | August 20, 2007 9:45 PM
Joe
You yourself in the past have said that the main cashcow for microsoft has been windows and office, all Ballmer is saying is that growth in these two areas is not expected to grow that much. As Mr. Rose said (and I quote what you have written here) "Dollar growth".
Ballmer then goes on to say that there are other areas that are growing.
I cannot see what is sooo wrong with that !!
In any business (including mine) when something has gone as far as it can(actually even before it has gone as far as it can), you need to be looking at other areas of growth ....normal business practice.
Posted by Neil | August 20, 2007 9:49 PM
Neil,
You're right here. It's clear that Ballmer is talking in terms of growth and percentages. I don't see how people can misinterpret that.
Posted by reflections | August 20, 2007 10:06 PM
Neil.
"noticeably less" in a few years time. is not to be confused with a flat market, here Ballmer is clearly predicting a downturn in Windows and Office revenue.
Long term=Bearish on MS, sell. Buy Apple, Red Hat, and IBM.
Posted by chips | August 20, 2007 10:13 PM
Chips
I should have known only you would have gone "against" normal business practice, oh !...probably Marco as well !
I run a business where items are bought and sold and it is normal business practice when one or more lines are doing as well as they can to look at doing the same thing in other areas, no one but you has said anything about a "downturn", you have assumed it !!
In all that has been stated NO ONE has said anything at all about a downturn only YOU !!
That reminds about the old saying for statistics..."figures don't lie ...but liars can figure".
Posted by Neil | August 20, 2007 10:27 PM
Neil;
Do you post over at;
http://minimsft.blogspot.com/
its mostly an ms employee site (run off company). But I think u can post even if you don't work for MS. There has been recurring blame over there at mini ms for the basically flat stock prices since Steve Ballmer took over. As you know, I am one of the few people who actually think Ballmer did a good job. Like when he pre-empted the bad news this February that Vista growth was not going to be so wonderful, and of course now the "noticeably less" statement.
Posted by chips | August 20, 2007 10:42 PM
Why ask me a question and then tell me what the answer is ??
But now that I know of it I will of course check it out !!(Thank you)
My last comment would (and should)have given you a clue Chips when I said "I run a business where items are bought and sold".
I am not anyones employee let alone microsoft's !!
I find it strange that someone that so learned as yourself cannot see things as they clearly are.
Posted by Neil | August 20, 2007 10:53 PM
Neil,
Sorry, I was not implying anything. Just thought you might find the blog interesting.
Posted by Chips | August 20, 2007 11:04 PM
Chips
Do insult my intelligence !! And then I will not think little of yours !!
First you ask if I post to a certain site, then you explain what the site is, and who it is for.
Now you say you were not implying anything !!
You are full of it ...
Posted by Neil | August 20, 2007 11:28 PM
I left out a word.
I meant to say...
Do not insult my intelligence, and then I will not think little of yours !!
Posted by Neil | August 21, 2007 12:14 AM
Joe
What I make from the transcript, is that Balmer said that Windows and Office will grow, but as percentage of Microsoft's total revenue the revenue coming from Windows and Office will be less. There are no news here I believe. If that doesn't happen that would mean that Microsoft has failed in most of it's other engagements. Thanks for the clarification.
Posted by evan | August 21, 2007 2:46 AM
Chips,
There is a lot of FUD and mis-understandings concerning DRM in Vista. I suggest that you pick up a reliable source and read what's true and what's not.
Posted by evan | August 21, 2007 3:04 AM
Evan
I am leading a challenge for Joe Wilcox to ban Chips from this site as he knowingly lied on the "Skype" subject, check it out !
Posted by Neil | August 21, 2007 3:30 AM
Neil,
Why ban Chips? His comments are very amusing to me...
Posted by evan | August 21, 2007 4:11 AM
evan
Well if you think that that is amusing ... then the next time someone posts a comment which is either offensive or a lie or both, then that will be just too bad I suppose.
If you do not want that sort of thing happening here (or anywhere else for that matter) then you should take a stand right here right now for what is right !!
If someone said something about you or your beliefs and they could be sued ....would you ?
Well we don't want to sue chips but lyeing is not funny and this site is supposedly for serious matters, liars cannot be tolerated, you call it FUD, do you think FUD is funny?? If you don't then Chips should go somewhere else !!
Because that is what chips has just done he tried to create FUD !!
Posted by Neil | August 21, 2007 4:24 AM
Neil, I agree with you that this sort of behavior is unacceptable. However, technically you cannot ban someone from such forums. He can always come back with another alias (or even the same) and email address. In addition, chips makes a good job dis-crediting himself.Banning him from this forum will probably have an opposite effect.
Posted by evan | August 21, 2007 4:43 AM
evan
I think Joe Wilcox could do it though !
From the other side of the coin ... yes chips has thoroughly discredited himself this time, and in the future he would not be taken seriously by anyone and I think he damn well knows it well and truly by now.
As far as myself is concerned I have never lied in my entire life ...never needed to. In business people actually appreciate the fact that they know where they stand with a person like me.
Posted by Neil | August 21, 2007 4:53 AM
I mostly just use the chat feature of Skype, and have not used the VOIP feature lately. But I have not had any problems logging in to skype. But then, I am not on 24 hours a day either.
Posted by chips | August 21, 2007 6:00 AM
I don't understand how Joe could've misinterpreted Ballmer's comments. What's there not to understand? Weird!
Posted by reflections | August 21, 2007 6:12 AM
Chips
You are a Liar !!
Go away you Liar
Posted by Neil | August 21, 2007 8:03 AM
Chips
Stop trying to make excuses
YOU ARE LIAR and you have been caught out.
You know it.
You have not even tried to tell the truth of the matter you liar !!
Your credability is shot completely even with the Linux people here ....YOU LIAR !
Posted by Neil | August 21, 2007 8:10 AM
Will someone put an end to this petty schoolgirl bickering. Its driving me up the wall. So put down your handbags and grow up.
Posted by William | August 21, 2007 8:51 AM
Damn it Neil! What the hell's wrong with you?
Go have a chill pill and take a nap. Maybe that'll put your mind back in order. You sound like a total retard.
It's not like you have much credibility yourself, especially especially when you say stuf like that:
quote'
"As far as myself is concerned I have never lied in my entire life"
Posted by Ryannoyed | August 21, 2007 2:31 PM
Joe: "You be the judge"
Easy. You purposely misrepresented the context. As posted, Ballmer was clearly talking as a % of the total. Really slimy Joe.
Posted by Paul | August 21, 2007 4:15 PM
Ryannoyed and William
To understand what I (and others) are going on about check out the "Skype me" article and the read the comments, and then you will know why Chips is liar.
Posted by Neil | August 21, 2007 7:56 PM
Neil,
I know full well what's going on and I also know why Chips is being called a liar, but that's not the point. The point is that you and Chips are terribly annoying. It's the same sh*t that's repeating itself over and over. You both keep spewing your bullsh*t and picking on each other idiots. Here, you're over posting like whiny little b*tch. William is right, you need to grow up.
Posted by Ryannoyed | August 21, 2007 8:57 PM
Neil,
From my personal example, I can tell you that there's nothign to be gained by fighting like this. If chips did lie, big deal. It's not like he was under oath or anything. Please don't get your panties in a bunch over such a small issue. It's not worth it.
Posted by reflections | August 21, 2007 9:05 PM
reflections
What I mind is Chips "holier than thou" attitude that he takes, not to mention being very condescending !!
Now that he has been caught out being a liar, no one seems to care.
But he can make all the nasty statements he likes about people being shills and get away with it !
It's not right !!!!
If Chips stuck to the facts rather than pushing his own agenda I wouldn't mind so much (anti microsoft and very much PRO LINUX, and there is nothing wrong with Linux, I just prefer windows).
In otherwords he should have stuck to the facts and not invented something instead !!
When a scientist invents his figures what happens to him, he is utterly discredited and no one but no one wants to be associated with him.
Chips has done this, and yet no one but no one can see what he has done is wrong.
He has accused people of FUD, being Shills, etc, etc. and now he can get away with it, live by the sword DIE BY THE SWORD chips.
Posted by Neil | August 21, 2007 9:42 PM
Neil, now you're sounding mopey.
Seriously, besides your opinion on MS and Vista, I don't see any difference between Chips and you. Most of the accusations you threw at him in your last post apply to you as well: "holier than thou" attitude, complex of superiority, FUD accusations, etc. and I'm adding childishness.
Indeed, nobody cares that Chips lied; personally I don't because I know what this blog is worth and the load of bullsh*t it contains, so one more piece of bullsh*t makes no difference. You're the only one here who's making a case about it. What do you want to happen? A mob going to Chips' house and stone him to death?
I'm really amazed at the obsession you two have for each other. You should get together (chat or e-mail, whatever) and sort things out. It would help more than crying on Reflections' shoulder.
Posted by Ryannoyed | August 21, 2007 10:56 PM
Ryannoyed
So if you think this site is full of bull***t... why are you here ??
Posted by Neil | August 21, 2007 11:04 PM
"So if you think this site is full of bull***t... why are you here ??"
A very good question indeed. It's definitely not here that I come when I want to find real information. This site is one among the many that I visit on a regular basis. It simply has become a habit, I come here and read about the new reasons (real or made up) for Joe to throw another rotten tomato at MS, and what the other readers think about it. Interesting arguments do take place once in a while and I must say that except for "the Neil & Chips Bitchin Show for Kids" I enjoy this site. So the answer would be entertainment; final answer.
Posted by Ryannoyed | August 21, 2007 11:59 PM
["noticeably less" in a few years time. is not to be confused with a flat market, here Ballmer is clearly predicting a downturn in Windows and Office revenue.]
No, he isn't Chips. That's simply the impression Joe was hoping to convey. In reality, what he said was that the % of the total represented by Windows and Office will decline as other businesses grow faster. Duh.
Posted by Paul | August 22, 2007 2:03 AM
That article said absolutely nothing. Lots of blather, little substance.
Posted by Vassili Zeitsev | August 22, 2007 9:49 AM